Leading loyalist William 'Mo' Courtney appeared in court today charged with threatening to kill victims' campaigner Raymond McCord.
The 50-year-old accused is also alleged to have harassed the daughter of a murdered UDA leader in the same incident.
Belfast Magistrates' Court heard claims that he directed an offensive remark and hand gesture at Tracey Coulter while she was in a car with Mr McCord yesterday.
Courtney, of Fernhill Heights in the city, was granted bail but banned from any contact with either alleged victim.
He is also prohibited from going near the home of Ms Coulter, whose father Jackie was killed during a loyalist feud in 2000.
Appearing in the dock dressed in a Barcelona FC tracksuit top, Courtney spoke only to confirm he understood the charges of making a threat to kill and pursuing a course of conduct amounting to harassment.
He was arrested following the alleged confrontation in the Peters Hill area of Belfast.
Mr McCord, an outspoken critic of loyalist terror groupings since the paramilitary murder of his son Raymond Jr, had been travelling in a car with Ms Coulter.
It was claimed that as their vehicle stopped at a junction Courtney walked past, gestured at Ms Coulter and called her a "w*****".
According to police Mr McCord then got out and exchanged words with the accused. The alleged threat was made at this point.
Opposing his release, a PSNI constable claimed Courtney may interfere with the injured parties or commit further offences.
Both charges are strenuously denied, a defence lawyer said.
He pointed out how the harassment charge was based on a threatening phone call to Ms Coulter four months ago which she claims came from Courtney.
The loyalist has repeatedly denied involvement, offered police his phone to examine and asked them to carry out voice analysis, the court heard.
His solicitor argued that the alleged incident yesterday was not enough on its own to sustain a charge of conducting a course of harassment.
"The height of the allegation is that this man called this lady a w***** and made a gesture to that effect," he said.
Basing her decision solely on evidence directly linked to the case, District Judge Fiona Bagnall granted bail.
She stressed, however, that Courtney was not to go near Ms Coulter, who lives a mile away from him.
Imposing a no-go zone, the judge allowed him to use transport on roads around the boundaries.
Courtney, who must also report to police three times a week, was released on £500 bail to appear again on January 7.